It has recovered much of that loss, so will many of the Techs this year.

As I noted Tuesday, this may be a year when Tech stocks become screaming “buys,” sometime late summer or fall. Expect a lot of false starts in the interim.

The rebound may come sooner if they get really crushed.

While the economy appears to be emerging from its long winter hibernation, we haven’t got enough confirmation yet to justify aggressive buying. We can’t expect much this week, it’s light on economic reports.

If the Street uses much improved economic news to bail out, then we have already seen the spring surge (3.8%) that I have been expecting.

The Street must be alert to the possibility of another unacceptable move by Russia’s V-Putin. Reportedly, Russia has expanded the range for its bombers into the Asian region, most likely to test air defense responses. This only suggests it is getting more aggressive. It remains an uncertainty overhanging global markets.

Beyond that, it’s a question of monitoring the prospects for a strong spring economic recovery and surviving Q1 earnings reports with as little damage as possible.

Do not rule out another downdraft to the DJIA 16,000 level. My December 31, 2013 post warned, “Get Ready for a Wild Ride.” That seems to be playing out.

TODAY:

Expect a modest technical rebound at the open. Fed chief Janet Yellen speaks at 10 o’clock, but I doubt her comments will have much impact.

Resistance starts at DJIA: 16,457; S&P 500: 1,875; Nasdaq Comp. 4,094

Support: DJIA: 16,326; S&P 500: 1,856; Nasdaq Comp.: 4,028

Investor’s first read– Daily before the open

DJIA: 16,401

S&P 500: 1,867

Nasdaq Comp.: 4,080

Russell 2000: 1,108

Wednesday, May 7, 2014 9:05 a.m.

RISK of CASINO PATRONAGE

Wouldn’t investors be better off without quarterly earnings reports. Well, how about just the reports, but no projections or guidance. That would take the “miss” out of the equation, which merely reflects the human fallibility of the Street or management, or both. In so many cases, an investor must score between reporting periods – holding a gain throughout is risky. A “miss” by one or the other can wipe out a nice gain.

Did it make sense for Whole Foods (WFM) price to drop 18% on a guidance change for its 12-months ending September of $1.56, down 5.5% from a previous projection of $1.65? WFM is down from $65.59 last November when management released one of two downward revisions. Small wonder the individual investor is on the sidelines, but a good promo for investing in funds.

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Sell in May and Go Away? (Wednesday’s headline)

That’s a cute little jingle and the media/financial writers enjoy these things, but they can be misleading. May has offered a number of timely exits, but I don’t buy the “stay away” part, clearly not until November.

You are already seeing articles about this seasonal phenom in the press and newsletters. Essentially, it is the backend of the “Best Six Months”* to own stocks (November 1 to May 1). Obviously, the message here is of the two six month periods, May to November is the worst for stocks.

This is true, but, as I have noted with the Best Six Months, a lot can happen in the interim.

This bromide can’t be taken as a “given.” Of the 26 years I studied a “top” occurred in May on 10 occasions ranging from May 1 to May 22. Two occurred in June and two in July. No meaningful top occurred in 12 of the years studied.

On far too many occasions over the last 26 years a May top was followed by a decline, but within months (well before Nov. 1) the market rallied sharply. I see it more as a trading opportunity – i.e. “Sell in May,” but be ready to buy back after a plunge.

Studies like this have to have a cut-off date, but are really intended to be accepted with an open mind, i.e. as May 1 approaches, move closer to the exit mentally, and be ready to lock in some profits and raise some cash.

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TECHNICAL ANALYSIS OF 30 DOW STOCKS ( as of 4/25)

At key junctures, I technically analyze each of the 30 Dow industrials then convert that data back into a projected DJIA. I seek a reasonable downside and a more severe downside, as well as a projected upside potential. This is a short-term projection, assuming no significant change in news. My reasonable downside was 16,204 and more severe downside: 16,132. The current upside potential was 16,594, which was momentarily topped last Thursday.

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HOUSING: Breaking news: MBA purchase apps surged 9% in May 2 week)

Mortgage Bankers Association (MBA)Purchase Applications reported for the April 25 week were down 4.0% and refi’s down 7.0%. Year/year refi’s were down 21%. The sharp drop in refis (y/y) is exaggerated by the fact present refis are compared with exceptionally high numbers a year ago which coincided with exceptionally low 30-year fixed mortgage rates. When rates shot up from 3.5% to 4.5% early last year, refi’s plunged. Always look at raw numbers or a chart when given percent changes over a period of time. The comparisons won’t be a dramatic in Q3 and Q4 when the year-ago numbers drop.

If new or existing home buyers think these rates are high, they should look back in time to 6%, 8% and 10% rates. The reality is rates are going up, and so are home prices. At some point, home buyers will have to buy, or the market may be out of reach indefinitely.

PARTIAL LIST - HOUSING STOCKS –

Tuesday: BZH had a good day, the other four lost ground. DHI dropped 2.4% when Deutsche Bank AG dropped it from its short-terkm buy list.

Russia’s annexation of Crimea was only the first step in President Putin’s power grab. Undoubtedly, he plans to stir additional unrest in sections of Ukraine where Russian speaking people are in great numbers. A military response by Ukraine would give him reason to invade Ukraine to protect pro-Russians and that would have an impact on global markets, which are vulnerable to begin with.

One of the factors that turns a normal market correction of 3% to 5% into a much bigger correction (5% to 12%) is new negatives that hit the market when it is about to rebound from the 5% correction. A sharp escalation in the Russia/Ukraine situation could be one of those factors.

Be prepared for a Russian incursion.

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THIS WEEK’s ECONOMIC REPORTS:

A much lighter schedule this week with only one housing related report – MBA Purchase applications coming early Wednesday. Today we get the PMI Services Index and ISM Non-Mfg. Index. For detailed analysis of both the U.S. and Foreign economies along with charts, go to www.mam.econoday.com. Also included is an explanation of each indicator. If you want to know when the next Employment report or any other key report will be released that info is also there under “event release date.”

MONDAY:

PMI Services Ix. (9:45): Apr. was 55.0 , up from mid Mar. 54.2 but down from 55.3 end of Mar.

ISM Non-Mfg. Ix. (10:00): Apr. up to 55.2 from 53.1 in Mar..

Global Mfg. Ix. (11:00): April hit six-month low of51.9 down from March 52.4

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